Recusal Watch in Investor Case

Court watchers are waiting to see which U.S. Supreme Court justices participate in a pending case that could determine whether lawyers and other third parties can be sued for helping companies commit securities fraud.

Chief Justice John G. Roberts Jr. and Justice Stephen G. Breyer have indicated they will recuse themselves. Both own stock in Cisco Systems Inc., the parent company of Scientific-Atlanta, one of the respondents in the case, Legal Times reports.

But lawyers in the case have heard rumors that one or both justices may sell their stock so they can participate, the legal publication says. A new law, backed by Roberts, makes it possible. It permits judges to defer capital gains if they sell stock to remove a conflict of interest.

Ethics expert Ronald Rotunda of George Mason University School of Law doesn’t like the idea of recused judges selling stock to participate in a case. “It looks funny; it seems manipulative,” he told Legal Times. A judge could sell stock at a high price, rule in a case, and then buy back the stock at a lower price, he said.

The case is Stoneridge Investment Partners v. Scientific-Atlanta and Motorola.